The spring real estate season is just around the corner and if you’ve been holding off listing your property until the snow melts and things pick up, I wouldn’t wait much longer, especially if you’re planning on remodeling, renovating, or updating your home before selling. But the real question is, how high-end should you go when it comes to remodeling? Clearly, you probably don’t want the highest quality products and the most expensive materials since you are not the one reaping the benefits of them, but you may not want to go builder quality either. So how do you find a budget for updating or renovating when you’re just going to sell?
You want to get the most from your investment, so the question is, where to begin? Here are some tips and suggestions to help get you started in determining the right materials and updates, and how to get the best rate of return on your investments.
Choose the room first.
Most people choose either kitchens or bathrooms to update or renovate when selling, but they usually are the most expensive. An entirely new kitchen renovation could cost upwards of $50,000 or more depending on the materials, and bathroom updates can be as much as $30,000. It really depends on which room you’re going to focus on and if you’re going to update more than one room, and pick and choose the features you want to replace.
Maybe it’s flooring throughout the entire house, a simple paint job for every room, or maybe it’s something even more extensive such as painting the entire exterior of the home or replacing the roof. Start by making notes of the highest priorities and if you are unsure, consider having a home inspection done prior to listing. The inspector can tell you the integrity of all facets of the house including the heating, wiring, plumbing, roof, siding, and even some cosmetic issues. Because home inspectors view hundreds of homes a year, they’re more likely to offer valid suggestions on what you should replace, repair, or update.
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Think about resale value and competition.
If you update the kitchen with high-end appliances and materials to the tune of $30,000 or more, you may not be able to recoup that cost when selling. Consider middle-of-the-road appliances and materials. Buyers can quickly spot a cover-up job so if you are debating on painting cabinets versus replacing them, consider your competition. If the buyers in your area are seeing all brand-new cabinets, simply covering them over with a coat of paint just won’t cut it. You’ll need to compete with what’s out there.
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If your kitchen has Formica counters, yet all of your competition is boasting granite or quartz, it may be worth it to use your remodeling budget for high-end counters in order to compete.
Decide whether your home is high-end, mid-end, or low-end and then you can make that call based on the value of your house compared to the median home value in your area. If the value is within 25%, it’s usually considered a mid-end home. Once you understand where your home falls, you can base the remodel around that level. There’s a saying, “Don’t buy the most expensive home on the block, instead of by the least expensive one with the most amount of expansion potential.” Buyers are looking for potential when most of the major things are already done.
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Focus on safety first.
If your home has some major hazardous issues such as a leaky roof, faulty wiring, or bad plumbing, you have to put your remodeling budget towards those things first. Buyers are not going to care about your high-end floors if the roof leaks and destroys them within the first couple of months. Unfortunately, these remodeling costs are not always the most glamorous or the most noticeable, but when a buyer inspects the property, if these things pose issues, you won’t get a sale no matter how good the cosmetics look.
Again, consider your competition and the homes in your area. If you are unsure about your competition, browse a few open houses on the weekend or look through pictures on the MLS to see what similar homes are selling for in your area. This can give you a good idea as to where to start your remodel efforts.
You want to appeal to the majority of homebuyers and that means offering them an updated and fresh look to the house. If you have no idea where to start, give me a call at 248-752-3088. I can do an on-site evaluation to determine the best updates that would benefit you in the long run and give you the best rate of return.